Oil jumps, stock futures slip as US-Iran talks stall

SINGAPORE: Oil climbed on Monday while U.S. stock futures slipped as stalled US-Iran peace talks prolonged the disruption of Middle East energy exports, unsettling markets and policymakers ahead of a packed week of central bank meetings.

Benchmark Brent crude futures rose more than 2% to touch a three-week high of $107.97 a barrel in early Asia trade, stoking inflation worries that have prompted traders to all but price out rate cuts this year.

S&P 500 futures eased 0.3%, in a modest move after the cash market notched a record closing high on Friday with investors snapping up AI winners. The dollar was higher although not by much, leaving the euro down 0.15% at $1.1706 and the yen marginally weaker at 159.53 per dollar.

While a ceasefire has frozen most fighting in the war triggered by U.S.-Israeli strikes on Iran two months ago, markets are focused on the shuttered Strait of Hormuz, the key chokepoint behind surging energy prices. The average LNG price for June delivery into north-east Asia was $16.70 per million British thermal units last week, nearly 61% above pre-war levels.

Goldman Sachs analysts lifted year-end oil price forecasts sharply from $80 to $90 a barrel for Brent, and even that rests on normalisation of Gulf exports by the end of June. “Non-linear price increases are likely if inventories drop to critically low levels, which we have not seen in the last few decades,” they warned in a note. U.S. President Donald Trump cancelled a trip to Islamabad by U.S. envoys for talks on the weekend, even as Iran’s foreign minister has continued to shuttle between mediating countries.

Early moves in Asia were higher with South Korea’s KOSPI and Japan’s Nikkei rising to record highs, though Australian shares slipped in holiday-thinned trade.